1-10 of 10 Results

  • Keywords: financial institutions x
Clear all

Article

Julie Birkenmaier, Mathieu Despard, Terri Friedline, and Jin Huang

Financial inclusion, the goal of financial access, broadly refers to the ability of all people in a society to access and be empowered to use safe, affordable, relevant, and convenient financial products and services for achieving their goals. Financial inclusion promotes household and societal financial well-being and requires access to an array of financial products and services such as savings accounts, credit cards, mortgage and small business loans, and small-dollar consumer loans. Despite the advantages, too many individuals and households lack financial inclusion and access by being unbanked, underbanked, and/or they are forced to use alternative financial services. Achieving financial inclusion will require participation from many different types of formal financial institutional actors, such as banks, credit unions, community development financial institutions, and national credit bureaus. Social work assists to build financial inclusion and access through practice innovations, research, and policy advocacy.

Article

War, trade, and money synergistically developed over three millennia, each proving important to the emergence of nation-states. By the 19th century, fiduciary money—forms of money based on trust, such as paper money—catalyzed the development of national monetary and banking systems. As nexus of international finance and metropole of the world’s largest empire, the United Kingdom garnered political and economic power. But over the course of two world wars, power shifted to the United States. Small successes and great failures of the interwar period influenced creation of Bretton Woods institutions, completing a transformation from an international monetary system into an international financial system [IFS], which included not only monetary flows but also a formal, institutionalized system of governance. The dollar’s flows became the IFS’ lifeblood, engendering structural power for the United States, which has been held in place through reserve currency status, institutional stickiness through banking and currency trading, and ideational influence. Introduction of the Euro and attempts in Asia to dismantle the “Asian Bloc” have shaken, but not removed, American structural power. Money’s foundations have always rested on trust, trading, and risk taking; emergence of extensive credit and virtual money, and related security concerns, bring forth new topics resting on these old foundations.

Article

Robert Wright

Between passage of the National Banking Acts near the end of the US Civil War and the outbreak of the Great War and implementation of the Federal Reserve System in 1914, a large, vibrant financial system based on the gold standard and composed of markets and intermediaries supported the rapid growth and development of the American economy. Markets included over-the-counter markets and formal exchanges for financial securities, including bills of exchange (foreign currencies), cash (short-term debt), debt (corporate and government bonds), and equities (ownership shares in corporations), initial issuance of which increasingly fell to investment banks. Intermediaries included various types of insurers (marine, fire, and life, plus myriad specialists like accident and wind insurers) and true depository institutions, which included trust companies, mutual and stock savings banks, and state- and federally-chartered commercial banks. Nominal depository institutions also operated, and included building and loan associations and, eventually, credit unions and Morris Plan and other industrial banks. Non-depository lenders included finance and mortgage companies, provident loan societies, pawn brokers, and sundry other small loan brokers. Each type of “bank,” broadly construed, catered to customers differentiated by their credit characteristics, gender, race/ethnicity, country of birth, religion, and/or socioeconomic class, had distinctive balance sheets and loan application and other operating procedures, and reacted differently to the three major postbellum financial crises in 1873, 1892, and 1907.

Article

Robin Gravesteijn and James Copestake

Microfinance refers to an array of financial services—including loans, savings, and insurance—available to poor entrepreneurs and small business owners who have no collateral and, otherwise, would not qualify for a standard bank loan. Those who promote microfinance generally believe that such access will help poor people out of poverty. For many, microfinance is a way to promote economic development, employment, and growth through the support of micro-entrepreneurs and small businesses; for others, it is a way for the poor to manage their finances more effectively and take advantage of economic opportunities while managing the risks. One of the newer fields that is getting more attention within microfinance is the measure of microfinance institutions’ (MFIs) social performance, which broadly is an indication of how well an MFI meets the social goals outlined in its mission and vision. Social performance is reflected in a wide range of indicators, including an MFI’s policies towards employees, like providing health care or maternity leave; to what degree an MFI targets the poorest of the poor for financial services; an MFI’s policies on environmental conservation; how low an MFI keeps its interest rates; how transparent an MFI is about these interest rates and other loan terms; and how an MFI’s services translate into improved lives for their clients.

Article

Federico Maria Ferrara and Thomas Sattler

The relationship between politics and financial markets is central for many, if not most, political economy arguments. The existing literature focuses on the effect of domestic and international political interests, institutions, and policy decisions on returns and volatility in stock, bond, and foreign exchange markets. This research bears implications for three major debates in political science: the distributive effects of politics, globalization and state autonomy, and the political roots of economic credibility and its tensions with democratic accountability. While the study of politics and financial markets is complicated by several theoretical and empirical challenges, recent methodological innovations in political research provide a window of opportunity for the development of the field.

Article

The international financial institutions (IFIs) have adapted and changed their policies over time to focus on global justice and poverty alleviation. This evolution is explored, with close attention to the role of political economy scholars and international events that increased the pressure on the IFIs to change their policies. Events such as the failure of structural adjustment policies, and the increasing role of nongovernmental organizations after the end of the Cold War were strong forces advocating for both debt relief policies and efforts designed to alleviate poverty. Problems surrounding the deadline for the Millennium Development Goals in 2015 and the increased role of the IFIs during the 2008 global financial crisis are also discussed.

Article

Corporate governance is a central issue in business and economics. However, governance in financial institutions is more complicated than in other fields because of the nature of financial services and instruments. Financial organizations are similar to other businesses in terms of their purposes of establishment, but confidence in management and complex risk structures are more important in financial organizations than in other businesses. In financial institutions, there are various areas in which problems arise that are related to corporate governance, including the agency problem and stakeholder protection. The importance of good governance for sound performance of financial institutions was reconfirmed during the 2008 financial crisis, raising the need to understand the agency problems and the efficiency of various corporate governance mechanisms in mitigating them. International organizations, such as the Organisation for Economic Co-operation and Development, the Basel Committee, the International Finance Corporation, and the International Organization of Securities Commissions, have been working with regulators and policy makers to improve corporate governance practices both in nonfinancial and financial institutions. Corporate governance, especially in financial institutions, is essential in guaranteeing a sound financial system, capital markets, and sustainable economic growth. Governance weaknesses at financial institutions can result in the transmission of problems across the finance sector and the economy. Consequently, the effectiveness of governance mechanisms of financial institutions and capital markets after financial crises had significant importance in a period that witnessed an intensive discussion of corporate governance issues with new regulations and the related academic works.

Article

Scholars of international political economy in the 1970s explored the relationship among a dominant power, leadership, and openness. The discussion soon centered on the concept of hegemony, meaning a situation in which a single state exercises leadership in creating and maintaining the fundamental rules of the international system. The scholarly arguments that ensued focused on the rationale for, and durability of, hegemony, and seemed relevant because of a shared assumption that U.S. dominance, so strong during the quarter-century after World War II, was declining. However, the debate was premised on a shared but incorrect empirical perception that American hegemony was declining. When similar questions arose again at the end of the 20th century, the terminology used was less that of hegemony than of unipolarity and hierarchy, and the key question was whether exercising continuing leadership would be so costly to the hegemon that its decline would be generated by its leadership. The issues of hegemony raised in this literature have taken on renewed relevance with the election of Donald J. Trump as President of the United States.

Article

When academics explore the politics of international monetary regulation, they tend to focus on three more specific policy challenges, each with attendant tradeoffs. Explaining how the global system has addressed these tradeoffs across time and space is at the core of the political science literature on the regulation of international monetary flows. Many political scientists are interested in the politics of macroeconomic imbalances. Some countries operate current account surpluses, while others operate deficits, placing downward pressure on their currency. One of the key questions examined by the political science literature on this subject is that of who adjusts. Moreover, some works discuss how domestic politics constrains and informs the positions of leaders. Other works discuss the role of international summits and organizations in facilitating cooperation. Others, in turn, explore how ideas shape our understanding of adverse events, and thus, which actors adjust to crises. Other political scientists are interested in regulatory matters. Some argue that in a world where capital mobility is high, the ability for states to regulate their financial systems may be constrained, fostering a race to the bottom. At the same time, much of the literature explores how issues of hegemonic interests, domestic politics, and ideational contestation enable the creation and implementation of some forms of global, though not others. Finally, many works explore how the system responds to currency crises.

Article

Finance is frequently, but incorrectly, judged a technical matter best left to experts. Equally mistaken is the exasperated conclusion encapsulated in the phrase “people, not profits,” which holds that capitalism, private investors, and markets are simply evil. Finance is necessary for economic development, but also has profound, and often unexamined, implications for social and political spheres. Channels for financial intermediation may be public or private, and national or foreign, implying tradeoffs among organizational forms. Public banks typically are superior in providing public goods and implementing national strategic plans, but private banks and capital markets normally are more efficient, assuming competitive markets. Savings may be sought within the national economy or from abroad, with domestic savings implying a smaller pool yet less subsequent international vulnerability, and foreign inflows offering potential abundance at the cost of external dependence. This framing yields four ideal-types of long-term finance (LTF): national public finance from state development banks; national private finance from domestic private banks and capital markets; foreign public finance via bilateral or multilateral aid or state investment (including from non-traditional lenders, such as China); and foreign private finance sourced from global investors seeking returns. Both national public and foreign public finance dominated long-term investment in Latin America in the early postwar decades of import-substituting industrialization. In the 1970s through the 1990s, they were succeeded by foreign private bank loans, followed by crisis and retrenchment. In the 21st century global political and market conditions brought a resurgence of foreign capital, including from both global private investors and non-Western public sources. Worries about problems arising from Chinese public finance to Latin America are likely overblown, as the quantity remains small, except in some Bolivarian Alliance countries. However, private foreign inflows, strongly promoted by Western-led multilateral actors, from the Organisation for Economic Co-operation and Development (OECD) to the World Bank, during the 2010s, may be more problematic. Excessive dependence on private securities markets funded by globally mobile capital often undercuts achievement of other valued societal goals such as reducing inequality and ensuring democratic accountability. Notwithstanding their predictable flaws, it may be time for a reemphasis on national, and possibly regional, public development banks.